Accruals/Deferrals

[KashJawed]

Hi All,

I am familiar with the accrual and deferrals in accounting but I am having a hard time mapping scenario in SAP. the t.code FBS1 (enter accrual) and F.81(reverse accrual) are just creating an entry and reversing it at end of month. But I dont get the big picture as how it overall affects the expense account and the deferral account.

Eg: if company pays prepaid rent (deferred rent - asset) 3 months in advance (jan feb mar), how does this map to the system? This is what I have so far (monthly rental $300):

Company receives invoice (jan 1):

-

---

Dr prepaid rent $300 (jan)

Dr prepaid rent $300 (feb)

Dr prepaid rent $300 (mar)

Cr vendor $900

(i am ignoring the vendor payment here to make it short)

End of Jan - Jan 31st:

-

---

Dr rent expense $300

Cr prepaid rent $300 (jan)

End of Feb - Feb 29:

-

---

Dr rent expense $300

Cr prepaid rent $300 (feb)

End of Mar - Mar 31:

-

---

Dr rent expense $300

Cr prepaid rent $300 (mar)

The end of month entries can be added as recurring but I don't see where I would setup accrual and reverse it at end of month in this case? Is there any online document with scenario on how accruals/deferrals work in SAP?

Thanks

[Former Member · Accepted solution]

Hi Kashif ,

Attached is some info....have a look.Take it to a word document & read it. Award points if useful.

Prepayments and Accrued Income / Accrued Expense and Deferred Income

Accrual / Deferral Posting

Use

To fulfill the period definition of expenses, you can enter accrual / deferral documents and, in a subsequent step, cancel them (collective processing).

The reversal date you define in the accrual / deferral document becomes the posting date of the canceling document.

Reverse posting:

The program creates a list of all documents and specifies whether a reverse posting is possible (test run) or has been made (update run). You can print the list out. After the test run, the reverse postings can be created from the list of all the documents for which a reverse posting is possible.

Prerequisites

You have posted a document in this fiscal year, but the expense, for example, also applies to the following year.

For example, you post an invoice for rent amounting to INR 11,000.00, which is issued over a period from 01.03.current FY to 28.02.current FY+1.

1. Access the activity using one of the following navigation options:

Menu path Accounting  Financial Accounting  Accounts Payable  Document Entry  Invoice

Transaction code FB60

2. In the Enter Vendor Invoice: Company Code BP01 screen, enter the required data.

Description R/O/C User action and values Comment

Company Code BP01

Vendor A2000

Invoice Date 01.03.Current FY

Posting Date 01.03.current FY

Reference User-defined text

Amount 12000

G/L Acct 58062000

D/C Debit

Tax Code V0 If required make the entry

Jurisdiction Code IN00 If required make the entry

Amount in Doc. Curr. *

Cost Center 1101

3. Post this document.

4. Access the activity using one of the following navigation options:

Menu path Accounting  Financial Accounting  General Ledger  Account  Display/Change Line Items

Transaction code FBL3N

5. In the G/L Account Line Item Display screen, enter the required data.

Description R/O/C User action and values Comment

G/L Account Selection

G/L Account 58062000

Company Code BP01

Line Item Selection

Status Select “All Items”

Execute (F8)

The total expenditure pertains to the next financial year also debited in the current financial year. The amount pertains to the next financial year about Rs.11000/- to be transferred to next financial year by using the Accrual / Deferral postings option.

Entering Accrual / Deferral Postings

1. Access the activity using one of the following navigation options:

Menu path Accounting  Financial Accounting  General Ledger  Periodic Processing  Closing  Valuate  Enter Accrual/Deferral Doc.

Transaction code FBS1

2. On the Enter Accrual/Deferral Doc.: Header Data screen, enter the required data.

Description R/O/C User action and values Comment

Document Date 31.03.current FY

Posting Date 31.03.current FY

Type SA

Company Code BP01

Currency INR

Reversal Reason 05 Accrual / deferral posting

Reversal Date 01/04/current FY

PstKy 50 First line item

Account 58062000

Enter

Amount 11,000.00

Tax Code V0

Jurisdiction Code IN00

Cost Center 1101

PstKy 40 Second line item

Account 24700000

Enter

Amount *

Text Accrual / deferral posting

3. Post this document.

4. Call up the line items for account 58062000 of 31.03.of the current fiscal year as follows:

Menu path Accounting  Financial Accounting  General Ledger  Account  Display/Change Line Items

Transaction code FBL3N

5. In the G/L Account Line Item Display screen, enter the required data.

Description R/O/C User action and values Comment

G/L Account Selection

G/L Account 58062000

Line Item Selection

Status Select “All Items”

Posting Date 31.03.current FY

Execute (F8)

Reversing Accrual / Deferral Postings

Prerequisites

The document number for the next financial year has been defined.

Posting period must be allowed to post the document.

Procedure

1. Access the activity using one of the following navigation options:

Menu path Accounting  Financial Accounting  General Ledger  Periodic Processing  Closing  Valuate  Reverse Accrual/Deferral Document

Transaction code F.81

2. On the Reverse Accrual/Deferral Documents screen, enter the required data.

Description R/O/C User action and values Comment

Company Code BP01

Fiscal Year Current fiscal year

Execute Test run

Update run

3. Call up the line items for account 58062000 and compare with the descriptions provided in the

previous steps.

[KashJawed · Accepted solution]

so then at end of every month I post a accrual/deferral entry for the remaining rent amount and reverse it on the 1st of next month , right?

This scenario has given me a better understanding now.

Thank you

[Former Member · Accepted solution]

Yes at the end of the month you post accural/defferal entry for the remaining rent amount using FBS1 and Reverse it using F.81 first of the month

Assign points if helpful

[KashJawed · Accepted solution]

Thanks a bunch to you all. This is so much clear to me now. Appreciate it!

points have been rewarded.

[Former Member]

Hi,

Use FBD1 (recurring document ) for your requirement. Enter the data in FBD1, one batch input session was created. Go to SM 35 run batch input session. you will get the required entry on required dates.

Radha

[KashJawed]

Radha,

You mentioned about FBD1 to enter recurring entry. Is this for deferral entries im assuming to be posted at end of every month?

Would you tell me if I post this as a recurring entry, how can i tell the posting to post the appropriate amount every month?

eg: end of first month recurring entry should:

dr deffered rent $900

cr rent $900

-- then nxt day in new period, i will reverse this recurring entry manually...(unless i can do this automatically as well)

then the next entry at end of next month should be for 900-300 (remaining rent) = $600... wouldn't I have to post this rule someway in the recurring entry i create?

[Former Member]

NO. you can see the list of recurring entries in f.15.

assign points if helpful

[KashJawed]

sorry, i didn't quite get you? I want to clarify what role recurring entries will play in deferral/accruals ?

[Former Member]

normally you dont post recurring entries for accurals or defferal. As accurals change from month to month. You should probably post accural using the transaction code FBS1. and reverse it using f.81

Assign points if helpful

[KashJawed]

so in this deferred rent scenario, where exactly is the recurring entry coming into the picture?

[Former Member]

Recurring entry is not in the scenario, I dont know why you want to use the recurring entry.

Assign points if helpful